Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Sun Communities Second Quarter 2022 Earnings Conference Call. At this time, management would like me to inform you that certain statements made during this call, which are not historical facts, may be deemed forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. Factors and risks that cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release. Having said that, I would like to introduce management with us today. Gary Shiffman, Chairman and Chief Executive Officer; John McLaren, President and Chief Operating Officer; and Fernando Castro-Caratini, Chief Financial Officer. After their remarks, there will be an opportunity to ask questions. As a reminder, this call is being recorded. I'll now turn the call over to Gary Shiffman, Chairman and Chief Executive Officer. Mr. Shiffman, you may begin.

Good morning, and thank you for joining us as we discuss our second quarter 2022 results and provide an update on our full year guidance. We are pleased to share that our portfolio has continued to deliver strong performance, as we fill the ongoing demand for attainable housing and affordable outdoor vacationing options. Highly recurring and dependable revenues across our portfolio are evident in the strong results we have consistently delivered throughout all economic cycles. The combination of these drivers led to Sun achieving core FFO of $2.02 per diluted share in the second quarter. On a constant currency basis, core FFO per diluted share was $2.04, which represents a 13% increase from the prior year. We continue to experience high demand for our Manufactured Housing communities and RV resorts. In the second quarter, we grew our revenue producing sites by 950, representing record quarterly growth. Over 85% of this increase came from converting transient RV customers to annual leases. We are pleased that when transient RV guests discover the experience and value proposition of an RV vacation at a Sun outdoors resort, they choose to make it a longer-term vacationing option. In the first half of 2022, we converted over 1,400 transient guests to annual leases, which is about three quarters of the record number of conversions achieved during all of 2021. Our proactive approach to converting transient guests to longer-term annual residents has been a consistent strategy that, as we build Sun's portfolios through selectively acquiring best-in-class resorts, has resulted in even greater revenue stickiness and higher NOI per site. Our same-property Manufactured Housing and RV portfolio demonstrates continued solid gains. In the second quarter, Manufactured Housing and RV same-property NOI grew 3.6% over 2021, driven by a 4.8% revenue increase offset by a 7.3% expense increase. Within our Marina segment, same-property NOI grew 7.1% for the quarter, driven by a 6.1% increase in revenues from slip storage income, offset by a 3.4% increase in expenses. Looking forward to the next several quarters, the current operating environment of high inflation and economic uncertainty presents challenges for all businesses. After nearly 40 years in the business, I personally have seen and experienced the cycle-tested nature of the demand for attainable housing and affordable vacationing, which when combined with our best-in-class assets, produces steady cash flow growth and reliable bottom-line performance. We have a decade-long track record of growing our business and cash flows with operating, acquiring, and expanding Manufactured Housing communities, dating back to 1975 and RV communities dating back to 1996. Specific to RV, I would highlight that we have three competitive advantages in continuing to garner transient RV revenues. Namely, our proprietary reservation technology, including Campspot, the quality and locations of our resorts, and an unmatched team that provides a best-in-the-industry customer experience. Among our Manufactured Housing and RV properties, it is also important to note that in over 90% of our Manufactured Housing portfolio, we were able to increase annual rents by CPI or greater. As a result, we can pass through rent increases annually to mitigate the impact of inflation. In the Marina portfolio, we expect our locations to perform well during uncertain economic times, given the higher average household incomes of our members and the continuous and growing need for both storage and the compelling fundamentals related to the demand side for marinas, which has an existing base of approximately 12 million registered boaters within the U.S., with a supply of only 900,000 to 1 million wet slips. Additionally, the overall supply of marinas continues to decline as developers acquire and repurpose them into waterfront, residential, and other commercial uses. As of June 30, our Safe Harbor Marinas represent a network of 130 marinas that provide the highest quality, essential wet slip and dry storage facilities that members require. In turn, this generates recurring revenue as the average Safe Harbor Marina member stays for approximately seven to eight years. The common fundamentals among Manufactured Housing, RV, and marinas are the scarcity of locations, demand that far outpaces supply, and absolute barriers to entry. This leads to resiliency of our revenues across our portfolio, as evidenced by our strong performance to date. We also achieved strong external growth during the second quarter, and through the date of this call, we closed on $1.8 billion of assets, consisting of four Manufactured Housing communities, three marinas, and 52 holiday parks, including the 40-property Park Holidays portfolio in the UK. For the remainder of the year, Sun's focus will be on integrating these assets into our portfolio and recognizing the accretive value of these acquisitions, while being highly selective in pursuing additional opportunities. Our development platform continues to be a compelling growth driver and a unique differentiator for Sun. During the second quarter, we acquired two newly developed Manufactured Housing properties in Arizona and Texas. Combined, they include nearly 450 fully developed sites ready for occupancy with an additional 600 expansion sites to be completed in the future. These developments give Sun the added attainable housing presence in highly attractive locations. A high-quality Manufactured Home in a Sun community is a very desirable way for people to achieve their dream of owning a home. Turning to our UK portfolio, the opportunities are very similar to the Sun Manufactured Housing business, including stickiness of revenues, attractive growth through expansions and developments, and similar supply and demand dynamics. The combination of the Park Holidays and the Park Leisure portfolios gives us a highly desirable footprint with 75% of our target customers within a 90-mile drive of one of our communities. The Park Holidays portfolio has an expansion pipeline of over 1,500 sites, in addition to approximately 700 newly developed and completed sites. Over the past 15 years, the Park Holidays team has shown their ability to create value for their stakeholders. Last and certainly not least, we released our latest ESG report during the quarter that highlights the significant progress we made in 2021. We increased our performance data and began laying the foundation for establishing improvement targets for key ESG measures. We are especially pleased that in its recently released ESG report, NAREIT recognized our back-to-school program, which offers free tutoring for dependents of Sun team members. Sun is very well positioned to continue to create value through organic growth, expansions, new developments, and select acquisitions. We are grateful for the entire team's ongoing dedication throughout integrations and look forward to building upon the deep operating experiences and strength of the team members to continue delivering attractive risk-adjusted returns for our stakeholders. I will now turn the call over to John and Fernando to speak to our results in detail. John?

Thank you, Gary. Our second quarter and year-to-date performance in 2022 reflects the consistently strong operational results and contributions throughout the entire portfolio. Our same-property Manufactured Housing and RV NOI increased 3.6% for the quarter, driven by a 4.8% increase in revenues and offset by a 7.3% increase in property operating expenses. Our Manufactured Housing communities performed well with a 4.4% increase in revenue compared to the second quarter of 2021. Our annual RV revenue increased 12.1%, driven by the high volume of transient annual conversions, which contributed revenue uplift on site in the range of 40% to 60% in the first year. For the three months ended June 30, same-property transient RV revenue increased 60 basis points even as we had 1,500 fewer sites due to our success of conversions to annual leases. The weighted average rental rate increase was 4.5% for the quarter, and occupancy increased by 170 basis points. Marina same-property NOI increased by 7.1% for the second quarter and 5% for the six months ended June 30, 2022. Our boat slip storage annual revenue increased 7.1% for the quarter compared to the same time last year, reflecting the positive supply and demand dynamics that Gary spoke of earlier. We acquired two Manufactured Housing developments this quarter: Spanish Trails, an age-restricted community located in Casa Grande, Arizona, and Pine Acre Trails, an all-age community in Conroe, Texas. These two newly developed locations provide Sun with an immediate opportunity to supply our quality, value-oriented solutions to municipalities in need of attainable housing. Within the quarter, Sun sold over 975 new and pre-owned homes in our communities. The average new home selling price increased 7.2% for the three months ended June 30 to $164,000, with the margin approaching 20%. Additionally, in our brokered home sales, we are pleased to report a 37% increase in sales prices year-over-year, demonstrating the enduring value of living in a Sun community. Our Manufactured Housing and RV total portfolio occupancy reached 97.2% as of June 30. Year-to-date, we have received approximately 29,000 applications to live in a Sun Community as demand for our communities remains robust. As Sun continues to execute on development expansion deliveries during and subsequent to quarter-end, we purchased three land parcels for $10.7 million located in Colorado, Utah, and Nevada. These three entitled land parcels will provide Sun with future opportunities for greenfield development and expansion of over 650 sites in areas of high demand and needed supply. On our last call, we discussed commencing construction on five Manufactured Housing projects located in Colorado, Florida, Texas, and California. Construction is advancing as anticipated, and we expect to have two communities open their first phases by the end of this year. Forward bookings for the total RV portfolio owned and operated by Sun are slightly ahead of last year's record pace, although they have moderated compared to our prior expectations. Continued growth is supported by an additional base of new customers who experienced an RV vacation for the first time last year. Similar to our strong performance over the Memorial Day weekend, during the 4th of July holiday, same-property transient revenue increased by 9.4% compared to 2021 and was driven by a 17.3% increase in average daily rates. We are pleased with our continued performance and are grateful for our team members, who continue to go the extra mile each day. I will now turn the call over to Fernando to discuss our financial results in more detail. Fernando?

Thank you, John. For the second quarter, Sun reported core FFO per diluted share on a constant currency basis of $2.04, which is 13% above the prior year and exceeded the high end of our quarterly guidance range by $0.03. The outperformance was driven by better-than-forecasted results from the total Marina portfolio and home sales contributions, given increased sales price and margin for the quarter. These positive variances at the property level offset higher real estate taxes, interest expense, and lower-than-expected transient RV revenues. As of June 30, Sun had $6.9 billion of debt outstanding, equating to a net debt to trailing 12-month recurring EBITDA ratio of 6.3 times. Our total debt carries a weighted average interest rate of 3.4% and has a weighted average maturity of 7.9 years. Excluding our bank revolving credit and term loan facilities, the remaining $5.2 billion of debt has a weighted average interest rate of 3.5% and a weighted average maturity of 9.6 years. During and subsequent to the quarter-end, we settled forward agreements on approximately 6.2 million shares that netted $1.1 billion of proceeds, which were used to pay down borrowings on our credit facility. We had previously disclosed approximately 5.2 million shares settled in connection with the Park Holidays acquisition in early April. The remaining 1 million shares were settled to fund additional acquisition activity. Additionally, earlier this month, we swapped GBP400 million of our funded GBP875 million term loan from variable rate to a fixed interest rate of 3.67% through 2025. Pro forma for the $1.8 billion of acquisitions and capital markets activity completed during and subsequent to the quarter, our net debt to EBITDA leverage ratio is inside our stated target range of 5.5 times. We have also reduced our variable rate debt exposure to 16% today as part of our active capital management strategy. Due to the addition of our Manufactured Housing portfolio in the UK, we will now provide guidance for core FFO on a constant currency basis. Like other REITs with non-U.S. dollar currency exposure, our constant currency adjustments eliminate the non-cash fluctuations in reporting that are due to foreign currency exchange rate movements relative to the U.S. dollar, thereby enabling investors to compare fundamental performance across time periods. We continue to see strong year-over-year growth across the platform after a great 2021 for Sun. As summarized in the press release issued yesterday, we are increasing the low end of full-year guidance for constant currency FFO per share by $0.02 to a revised range of $7.22 to $7.32 per share. The $7.27 midpoint of our new range is $0.01 higher than last quarter and represents 11.7% growth over 2021 results. We are establishing third quarter 2022 constant currency core FFO per share guidance in the range of $2.56 to $2.61. At the same-property level, we are moderating our growth expectations slightly for Manufactured Housing and RV by 50 basis points to 6.4% at the midpoint of a 6% to 6.8% range. The modestly lower growth accounts for higher real estate tax assessments in Texas, one of our larger Manufactured Housing markets, and current transient RV revenue expectations for the remainder of the year. Third quarter same-property MH and RV NOI growth is expected to be 6.8% at the midpoint of guidance. For Marina same-property, we are slightly adjusting the NOI growth range for the year by 30 basis points to 6.4% at the midpoint of a 6% to 6.8% range. Third quarter same-property Marina NOI growth is expected to be 8.3% at the midpoint of guidance. As a reminder, our guidance includes acquisitions and capital markets activity through July 25, but does not include the impact of prospective acquisitions or capital markets activities, which may be included in research analysts' estimates. This concludes our prepared remarks. We will now open the call for questions. Operator?

Thank you. We will now start our question-and-answer session. Our first question comes from Keegan Carl with Berenberg. Please go ahead with your questions.

Hey, guys. Thanks for taking the question. Maybe first here on transient RV in the quarter, I know prior you disclosed the forward bookings were up 4% for same-property. Are you guys seeing any trends that you see there, shorter length there is visibility into the booking window, and then how do you think about guidance on this particular segment for the rest of the year?

Hi, Keegan. It's John. Good morning. Our booking window for summertime stays in our RV resorts is typically between 15 to 60 days, and we notice the majority of our bookings during this period. It has increased from 60 days out to 15 days before the stay, which is when we see the peak of bookings. Compared to previous years, we haven't observed any significant changes in the timeline of when bookings occur.

And then Keegan, to complement the second part of your question, as far as our expectations for the full year on RV transient revenue growth, we had previously stated a range of 12% at the midpoint. Those expectations for the full year now are at about 6.4%, with a third quarter growth on the transient side of about 4%.

Got it. Very helpful there. And then maybe just one more on Marina. I know I got its guidance as well, just maybe a little bit more color here. Obviously, there is a 30 basis point cut, is it more expenses or demand deteriorations, any more color there would be helpful?

Hi, Keegan. It's Gary. I think that what we're seeing is just a great performance overall. Demand and rate continue to be exactly as we underwrote it. Guidance is slightly adjusted for some longer stays that resulted from more of the restricted COVID travel by the big boats. So as things opened up a little bit, the boats, as they normally do travel, started traveling a little bit more. So the modest adjustment that's in there is our standpoint as a result of that.

Great. Thanks for the time, guys.

Our next question comes from the line of Wes Golladay with Robert W. Baird. Please proceed with your question.

Hey. Good morning, everyone. Want to go back to the pace for the third quarter for RV. I think you said it's going to be 4% in the third quarter. I just wanted to see what you're seeing on the ground. Are you seeing fewer visits, shorter stays, or you're just converting too many sites to annual?

Good morning, Wes. It's John. I would say that 2021 was a year of unprecedented growth for us. We've talked about reaching record numbers of new guests, which set the stage for our performance. Regarding your question, we are still benefiting from those trends, and our RV performance in 2022 has been strong. To provide some context, since the beginning of 2021, we've converted over 10% of our transient sites into annual leases, which typically leads to a 40% to 60% increase in revenue during the conversion year. In the first half of 2022, we continued to see growth by converting more than 1,400 sites, which is over 75% ahead of our record results from 2021. Even with a 10% decline in transient sites over the past 18 months, our transient RV revenue still grew in the second quarter, with a forecasted growth of 4% for the third quarter. We've had strong performance during the Memorial Day and 4th of July holidays, and we anticipate a growth rate of around 6.4% for the full year. This is slightly higher than what we typically would see in transient growth before the pandemic, particularly with increased conversion success and despite current inflation of 9%. Overall, our transient performance remains steady, and we continue to build upon the customer base we established last year.

Got it. And I want to go back to that comment about 12 million boaters and supply of 1 million slips. Do you have insight into the pent-up demand to become a member for the Safe Harbor platform? Is there any market that really stands out where there is a really big backlog?

I think all markets stand out. The fact of the matter is that occupancy remains very, very high because demand, as I said, is far greater than the wet slips that are available today. But if you want to follow up on anything specific related to anything, please reach out to Fernando or Stephanie Sera of the company, and we can get you specific details regarding individual demand and occupancy. For most marinas during the high season, we have more demand than we can actually supply, and they are at full occupancy, and for those on the tour, there are examples of where occupancy is even above 100% where full-time marina members move out, and we can temporarily rent their sites with their permission. Again, overall occupancy and any adjustment to guidance is really related to a little bit of the easing of COVID travel on the larger boats.

Great. Thanks, everyone.

Our next question comes from the line of Michael Bilerman with Citi. Please proceed with your question.

Thanks. It's Nick Joseph here with Michael. Starting with Park Holidays, I know it’s only been a few months, but you've provided guidance for the third quarter and the second half of the year. This also includes the acquisitions made after the initial company acquisition. I was curious about how the initial properties acquired have performed compared to expectations so far.

Yeah. I'll start out, and anyone can jump in. But we are certainly equal to or slightly exceeding. All of our underwriting performance remains very, very robust in the UK. The addition of the Park Leisure portfolio, as I mentioned in our comments, gives us an incredible footprint with really targeted resident within a 90-mile drive of coastal and inland properties. So the expectation is, as we look out over the next 12 months, will continue to integrate all of the acquisitions into Park Holidays' operating system, and we would expect continued growth to equal or exceed our underwriting. So very, very positive what we're seeing there.

Nick, this is John. I'll just add on to that with the Park Leisure acquisition. Those 11 properties really fit the sweet spot, in the fact that those sites in those properties are 92% owner-occupied. That was 400 expansion sites in front of it as well, so it's a really solid acquisition that we're excited about.

Thanks. And then I guess just more broadly on the acquisition pipeline, how is it looking today, and are you seeing any changes to cap rates across the different asset classes that you invest in?

So, Nick, it's Gary. We continue to see opportunities across all three platforms. We do remain very disciplined with regard to our view on capital allocation. Generally, Manufactured Housing and RV remain in the 4% to 5% cap rate range with the highest quality Manufactured Housing still seeing transactions in the 3% cap rate range. Marinas remain in the 6% to 8% range for the quality that Safe Harbor and Sun are looking for. On the UK side, yields for everything we've done, tax-adjusted, have been in the low to mid-7%s. We haven't seen a lot of change as far as our outlook goes. We would expect the challenging financial markets and conditions out there could yield some very special opportunities, and we'd like to think that we'd be in a position and prepared to take advantage of those opportunities as they move forward. So we'll continue to watch, but a very disciplined look as to how we're thinking about external acquisitions at this time.

Thanks. Are any of those opportunities presenting themselves now, or is that more of maybe potential future expectations?

I think it's more of a future expectation. There are a couple of platforms in Australia that I never would have thought would have come to market that are coming to market right now with some of the bankers. And we are not involved in those processes at this time, but it's interesting to note that they came to market before I ever thought they would have.

Thank you.

Our next question comes from the line of Brad Heffern with RBC Capital Markets. Please proceed with your questions.

Yeah. Thanks. Looking at the Park Holiday's NOI split this quarter, about 65% of it was from home sales. Can you reconcile how that compares to the 37% of gross profit that you quoted with the deal? And maybe just walk through how the split changes quarter by quarter with seasonality?

The expectation for the touring season, which is the peak period for the Park Holiday's portfolio, occurs during the third quarter. As a result, there is a larger percentage of NOI contribution from real property in that quarter. We can review those percentages in a follow-up call. I don't have those figures available at the moment.

Okay. Got it. And then on the currency exposure, is there a plan to hedge that in some way or maybe pursue a pound offering in order to neutralize some of that?

That's a great question. Just to remind everyone, we are fully naturally hedged in the UK, where we financed the transaction through borrowings on our multi-currency credit facility that includes Sterling. Any cash flow generated by our UK operations is used to pay down any outstanding debt. We are not transferring dollars back and forth to the U.S., so there are no realized gains or losses from currency translation. If we do plan to move capital from the UK back to the U.S. in the future, we would consider implementing cash flow hedges at that time.

Our next question comes from the line of Michael Goldsmith with UBS. Please proceed with your question.

Good morning. Thanks a lot for taking my question. My first question is on the impact of inflation per site growth in 2022. With it elevated historically, but not necessarily at the level of inflation when you said 2023 rent inflation levels will likely be higher than last year. There have been inflationary times in the past; can you help us think about how much you're able to pass along during elevated inflationary times? And just related to that, there has also been elevated expenses, and your revenue isn't growing as fast as your expenses this year. So as we look forward, do you think that revenue can grow faster than expenses?

Well, thanks, Michael, for pointing out that I'm the oldest person in the room. So when we look at history, I'm going to end up here. Let's start with the latter or move to the former. I think we've shared with the market that about 40% to 50% of our rental increases in Manufactured Housing had to be noticed 90 days in advance of January 1, mostly in the Florida properties. But when we looked in August and September at our budgeting as we're doing right now, at that time, we didn't have that crystal ball to ever imagine inflation coming to this 9.1%. That was most recently reported in. So we sat rental increases, I think roughly 4.2% for the year in Manufactured Housing, and we have to live with those until the next rental increases are put in, which we're beginning to budget right now. And to the beginning of your question in my long history of 40-plus years in Manufactured Housing and through recessionary periods and certainly through the GFC, we are able to pass through all inflationary expenses in the form of annual rental increases in our current portfolio, CPI or greater in 90% of our Manufactured Housing communities. So we feel very comfortable that with the insight of where inflation is going in the benefits that we'll have over the next 60 days to watch it, we will be able to adjust our rental increases to match our expenses related to our cost. So this coming year, 2023, we should see equal to or greater increase, okay, on our average rentals.

That's really helpful. Thanks a lot, Gary. And then on the topic of G&A, the increases you've built the foundation to support the number of business lines. At this point, do you feel that you have the necessary infrastructure in place to support the growth of your three or four segments going forward? So said in another way, should SG&A growth moderate in the years ahead?

Yeah. It's a great question, and it really ties into the rate question that we just spoke about. When we look at 2023, we recognize and hope our stakeholders do as well that we've established a tremendous platform. It will allow us to grow and create value in all the ways that we continue to share with the market, the internal opportunities of growth and external. When we couple that with both historical performance and our ability to pass on inflationary costs in the form of rent, along with the G&A that really has grown substantially over the last three or four years, we would expect to be able to leverage that G&A. And as we look out forward, really our goal and budgeting is to be flat year-over-year G&A. So that coupled with the rental rate increases, the pass-through inflation allows us to be very comfortable with how we're thinking about results going into 2023. So, scalability of G&A, I think, is really at the forefront of what the company can deliver going forward.

Thank you for that. Good luck in the second half.

Our next question comes from the line of Samir Khanal with Evercore. Please proceed with your question.

Hi. Good morning, everybody. Hey, Gary, regarding your last point about G&A, when you mentioned keeping that flat next year, are you referring to an absolute level or G&A as a percentage of revenue?

We're going to get as close as we can on an absolute basis, but I was talking about percentage of revenue. But we're really targeting, as I said, leveraging everything. We’ve invested. You bring the Marina platform into public reporting position, and same is true with the work being done on the UK. And as we also continue to reduce the transient sites from transient to annual at the pace we're going right now, we would expect there to be some G&A savings there as well.

Okay. Got it. Fernando, this is more of a modeling question. You mentioned conversions from transient to annual, and that really picked up in the quarter. How should we think about the pace of conversion for the second half of this year and into next year at this point?

As we look at our current inventory of about 28,600 to 28,700 sites of transient RV sites, we would say that is a good 25% of those sites that are candidates for conversion over time. We have seen elevated conversions over the course of 2021, and certainly 2022, where we're already at 75% of last year's record figures, and could expect ending 2022 with a higher conversion amount, but we still have a good runway for a number of years. And as we continue to expand our communities, that does provide additional inventory for conversion over time.

Okay. Got it. That's it from me. Thanks, guys.

Thanks.

Our next question comes from the line of Joshua Dennerlein with Bank of America. Please proceed with your questions.

Hi everyone. I noticed a comment in Page 10 of your press release regarding the reclassification of certain revenues and expenses on the Marina side. I'm interested in more details about what exactly changed there.

Sure, Josh. Thank you for the question. We've primarily reclassified certain expenses, mainly utilities, payroll, and credit card fees to most closely align with the revenue drivers for those expenses. This reclassification did not have any impact on expected growth.

Okay. So it's overall, were they just not in that same-store number before, is that...

There was a reclassification between real property, real property revenues, and expenses and service, retail, dining, and entertainment revenues and expenses.

Okay. Maybe I'll follow up offline because I had one other question. So one of the hot topics I've been fielding from investors is that you've added two new business segments, Marinas and Park Holidays, and there's not really that much publicly available data to see how they performed in recession. Can you maybe walk us through how you're thinking about the cyclicality of these business lines?

I believe those of you who participated in the recent investor tour in the UK can see how the UK Park Holidays business closely aligns with our Manufactured Housing business, especially regarding our snowbirds. These properties serve as second homes or vacation homes for buyers who must own a single-family residential home. Over the past 15 years, current management has significantly contributed to building the portfolio, which has experienced solid growth even during the global financial crisis. We view this business similarly to our Manufactured Housing portfolio, which has proven to be resilient during challenging economic times, providing affordable housing and vacation options. Our best comparison is the performance data over the last 15 years, contrasting their portfolio with how Manufactured Housing has fared over 30-plus years as a public company, and 10 years as a private entity in which I have been involved. Currently, we continue to see performance aligning with our budget, or slightly exceeding it. Regarding marinas, we lack same-property data but are developing performance metrics that we will share. We fundamentally believe this sector complements our platform due to the significant demand exceeding supply, as boats are getting larger, making it impractical to store them in backyards or garages, particularly with homeowners associations prohibiting long-term stays. Furthermore, we are witnessing a decline in the number of marinas across the U.S. as real estate development occurs in high-value waterfront areas. Therefore, we expect marinas to maintain strong performance in this market. Boat owners have a passion for boating, and there is a lack of places to keep their boats on the water, making us optimistic about resilient performance going forward.

Our next question comes from the line of John Pawlowski with Green Street. Please proceed with your question.

Hey. Thanks for the time. Fernando, a question on the cost structure of the Manufactured Housing business. So you did mention MHs are up about 8.5%, they were up 8% last year. If a high inflation environment continues, is high single-digit expense growth for the MH portfolio a reasonable betting line?

Well, thank you for the question, John. I would say there are a number of items that would moderate the expected growth over the course of the second half of the year. The main contributor to that would be an easier comp in the second half of 2022 for payroll, as we've shared with the market. During July of 2021, we had increased the Sun minimum wage for all team members at the property level, and that led to much higher expense growth over the course of the last 12 months. That comp now rolls off, and it's a more moderated growth in that step function increase. The moderating that would be, as shared in my remarks, we did receive real estate tax assessment in Texas that was higher than our expectations. As normal course of business, we can test that assessment, and then to the extent that we are successful, we then reduce that tax hit. But we would expect that expense growth for the Manufactured Housing portfolio to be lower than what you've seen over the course of the first half of the year.

Okay. And then a question on marina revenue between transient and non-transient. So I know transient is small, two-line items going in different directions in the quarter, excluding transient, up 7.5% transient revenue is down 9.5%. So can you just understand kind of the building behavior and the customer behavior around the docks, right? And why transient is declining, while other revenues are still increasing by a pretty big clip?

I think some of the changes are due to larger boats that occupied many sites during COVID and haven’t moved much. As they begin to move again, we are seeing some of that reflected in increased transient activity. Initially, there weren’t many slips available for transient use at the start of the season, which contributed to this shift. Overall, we experienced a slight increase in transient growth.

And John, you mentioned, right, it's a very small number. You're talking about $4 million over the course of the quarter. So, the comparative growth number is larger, but we're talking about a small dollar amount.

Understood. Gary, are you seeing any extensive activity flow through the marinas right now? Outside of that movement in the large ships due to COVID issues?

We are not, John. I know that visiting some of the marinas recently, everybody is out there enjoying their boats, but it has obviously been putting up with a lot of hot weather. And we do not see any trends that would be different than the ordinary with regard to rental of slips. There is more demand than we can actually pick and the long-term membership.

All right. Thanks for the time.

Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question.

Hi. Good morning. Question on the Gurney's deal you did in July in Montauk. It's a pretty sizable deal. Just wanted to differ a bit if that does include the resort portion. And if you would consider maybe selling that to hospitality owners if that makes sense and maybe some more details around that would be great.

Sure. Safe Harbor had been working with a seller for many, many years on a relationship basis, trying to acquire this Island Marina, which came with the resort and the marina. And so location is just an irreplaceable asset located in Montauk, which is really a high-demand area for the over 10,000 existing regional Safe Harbor members to utilize. So it was acquired with the hotel same seller, so both were what was sold to Safe Harbor. And obviously, the membership has already begun taking advantage of both the resort and the slips that are there. They're really pleased with Sun's strength and a history of buying on an accretive basis and recognizing the long-term value creation opportunity achieved by growing yield and cap rates on an annual basis, which we’ll do in the marina. And the resort is being operated by a third party, which is actually the sellers of Gurney Resort Management company. And we will definitely be looking at our options for opportunities regarding that resort as we move forward.

Thanks. I have one more question regarding the Texas Pine Acre Trails mobile home deal. There haven't been many mobile home deals in the U.S. lately, but I've noticed a few this quarter. I'm interested in understanding how that deal was underwritten, considering the development site, and how the interest for it compared to some of the age-restricted deals you've undertaken elsewhere.

I can explain the interest and how it developed. We've spent the last six years building our pipeline of sites. Currently, we have about 30,000 sites in various stages of entitlement. As Gary has mentioned multiple times, this provides us with a unique advantage. In our target markets, we interact with numerous contacts, as it requires significant effort to bring them into the pipeline. We encountered resellers who had already entitled and begun developing some sites, and we took over their projects mid-way. These opportunities align well with our investment profile, where we anticipate generating a high single-digit internal rate of return in an area that has a slightly elevated lease-up process, similar to what we've observed in Texas. This makes it an appealing development acquisition, especially with 400-plus sites available for rapid leasing.

All right. Thank you.

Our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.

Thank you. I had a question on your UK getting into the second half of the year a little bit over $81 million NOI. Where will that trend lead to on an EBITDA basis?

John, we provided guidance right after the first quarter of general and administrative expenses for the Park Holidays platform at a midpoint of about $27 million from April to December on a non-constant currency basis. That figure is expected to be slightly lower, approximately $1 million or $2 less than $27 million.

Okay. I just wanted to know if there was any additional G&A through recent acquisitions or other deductions from NOI to EBITDA?

In there, yes, small, yeah. Small figure.

My second question is post quarter, you raised equity on a forward basis at a little bit over $172 per share. I was wondering how you were able to accomplish that, given the share price wasn't at those levels?

Yeah. I think that was just the timing of what was available in the market, and we were just match funding to some of the acquisition activity that was going out there.

Okay. Thank you.

Our next question comes from the line of Anthony Hau with Truist. Please proceed with your question.

Hey, guys. Thanks for taking my question. Fernando, going back to the UK guidance, last quarter, the guidance only included Park Holiday and an implied roughly around $125 million of NOI. If you back out G&A from EBITDA. The current guidance includes Park Leisure as well and implies $125 million of NOI after adjusting for FX. It seems to me that you guys have a lower guidance even on a constant currency basis; am I missing something here?

We provided an update this morning regarding our expectations for the next six months, which includes Park Leisure and other acquisitions in the UK. At the midpoint, this contribution is expected to bring in about $102.5 million. When we add the $40.5 million we've already realized in the second quarter, the total NOI contribution will be approximately $140 million.

Got you. And the recent heat wave in UK make any impact on the Holiday Parks at all?

No, it didn't. This is John. I talk to those guys every day.

That concludes our question-and-answer session. I'd like to hand the call back to management for closing remarks.

Thank you, everybody, and we look forward to speaking again on next quarter's results and feel free to follow up with any of your questions. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.